UK experiencing higher inflation rate and further supply chain disruptions

Energy prices have surged recently, and the UK economy is particularly affected since the truck driver shortage due to Brexit is causing further supply chain disruptions. See what our charts show plus ESG, real estate and international travel data.

By 
Julius Probst, PhD
 on 
October 1, 2021

The following chart shows the euro-pound exchange rate together with the instantaneous 5-year forward spread between the Eurozone and the UK. The UK economy is currently experiencing a higher inflation rate. It is thus extremely likely that the BOE will tighten monetary policy before the ECB. The forward spread is showing a high correlation with the exchange rate and based on the chart, we can expect the pound to modestly appreciated against the euro.

Macrobond users, access the chart here

Energy prices have surged recently, and the UK economy is particularly affected since the truck driver shortage due to Brexit is causing further supply chain disruptions.

Macrobond users, access the chart here

The misery index is adding up the inflation rate and unemployment rate. A high combination of both variables obviously implies that the country is not doing so well. Using this particular metric, the US is scoring quite badly amongst advanced economies due to the very high CPI inflation rate right now. While in this particular version I have attached a higher weight to the unemployment rate - which is more harmful to society - one can see that the US is still performing quite badly.

Macrobond users, access the chart here

However, US households have actually done extremely well thanks to a booming economy. US household net worth increased some 20% (yoy) to more than 140 trillion USD thanks to a booming stock market and rapidly surging house prices.

Macrobond users, access the chart here

The Covid-19 pandemic is still affecting the world even as vaccination rates are approaching high levels, at least in advanced economies. TSA checkpoint data shows that travel is still much lower than in 2019.

Macrobond users, access the chart here

The following chart for the US, Canada, and France shows that international travel is even more depressed. The French data is missing values for the two lockdown periods. This is something that can be easily fixed in the Macrobond document in the conversion settings by using "zero values" in the missing value method.

https://help.macrobond.com/faq/calculations/how-to-replace-all-missing-values-in-series-with-0/

Macrobond users, access the chart here

The last chart shows how Southern European countries are much more dependent on tourism. Total receipts from foreigners were some 10% of GDP for Greece and Portugal pre-pandemic, which can also explain why these countries experienced a stronger GDP decline in 2020 compared to Northern European economies.

Macrobond users, access the chart here